Reflections, Observations, and Analyses Pertaining to the Canadian Political Scene

Tuesday, December 11, 2012

A No-Cut Clause for Peter MacKay?

Readers of this blog may be aware that I am no fan of Harper Defence Minister Peter MacKay. The breadth of his ineptitude is stunning, and the concept of ministerial responsibility seems foreign both to him and his boss. Countless times he has proven to be an embarrassment, not only to Canadians in general, but undoubtedly also to the government he serves.

Yet like a kind of demonic Energizer Bunny, he keeps on going and going and going.

I have a theory.

Despite my depth of cynicism about our politicians, I am normally loathe to indulge in conspiracy speculations; however, McKay's long tenure as Canada's Defense Minister, his widely-demonstrated incompetence notwithstanding, has got me wondering.

First a little history. People may recall that MacKay became the last leader of the Progressive Conservative Party of Canada in 2003, having secured the position on the final ballot after making a deal with rival David Orchard never to merge the party with the Canadian Alliance Party.

Well, of course MacKay quickly betrayed both his undertaking and the Progressive Conservative Party, and the rest, as they say, is history. Yet I cannot help but wonder whether the quid pro quo for this betrayal was conferring upon the unprincipled MP for Central Nova 'a no-cut clause' in his cabinet postings. The Minister of Defence since 2007, it seems that no matter how manifest his inability to competently discharge his duties, he wears a mantle of invincibility.

Probably the most consistent evidence that MacKay is singularly lacking in ability has been his staunch defence of and prevarications about the F-35 fighter jet. Despite compelling evidence adduced over the years that the replacement for the CF-18 will prove far too costly and is ill-suited for our military needs, MacKay has been its biggest cheerleader. Now, after years of denigrating those who oppose the purchase, even the government has admitted it needs to seriously rethink it.

In all honesty, Anon, I can't relate to such a hypothetical situation, so I can't answer it, although it does raise the question of why Canada would be charged with the responsibility of preventing such a worldwide financial apocalypse.

About a week or so ago, the National Post reported that when the Conservatives announced the reconsideration of the F-35 as a sole-source replacement, this prompted a number of very nervous phone calls to Ottawa from Bethesda (the headquarters of Lockheed Martin) AND Washington.

As I alluded to elsewhere, the Conservative's stubborn determination to cling to the F-35 no matter what didn't make much sense, and seems especially out of character when considering that the Conservatives are at odds with their own public service.

But then something struck me about the numbers. Wikipedia reports that the F-35 program as a whole is worth about $200 billion to the US economy. As you should know, the Americans are currently staring down the barrel of the so-called fiscal cliff, and even if they get passed that hurdle, their economic woes are likely to persist for quite some time.

And the exact phrasing reported in the Post was that Washington was afraid that Canada would be the first domino to fall. As you should know, several countries are eying purchasing the F-35. I crunched some numbers, and was able to determine that the F-35 purchase over 10 years amounts to about 0.2% of the US GDP PER YEAR, or about 2% of US GDP if was all at once.

I've heard it said that if the US were to lose about 5% of its GDP, that this would be an economic catastrophe.

The fiscal cliff, should it not be resolved is estimated to be responsible for a possible loss of about 3% of US GDP.

The fear is therefore, that if Canada pulls out, the cost per unit for the international partners will increase, pushing the F-35 out of their price range. The international partners will fall one after the other like domino's, and the whole project will result in a $200 billion loss, not count money already spent on research and development. Losing the F-35 will probably sink Lockheed Martin. As a multi-billion dollar corporation, how many people's retirements and incomes are dependent upon the good financial health of Lockheed Martin?

That number is impossible to estimate, but if Lockheed Martin goes down, it will significantly drag down the market indicators, and investors will rush to escape the crash, which will only crash faster as more, and more pull their money out of the market for fear of loss.

The pensions and incomes of millions will evaporate, which will increase the burden on government, who will increase the tax burden, which will kill jobs, which will increase the burden on government... you get the idea.

If the US economy crashes, surely you must know that ours will crash as well.

That fact I'm reasonably sure is why the Tories are so determined to see us buy a barely capable fighter. Because if we don't, it could possibly trigger a world-wide depression.

That also explains the Northern Gateway pipeline, and allowing CNOC to acquire NEXEN, and Harper's secret investment treaty with the Chinese. He's doing everything possible to soften the blow of a possible depression.

This is a very interesting scenario that you present, Anon. Not being an economist, I do not know how likely it is that the collapse of Lockheed Martin would ensue from the cancellation of the F-35, given the fact that it is such a large company with worldwide interests.

Coming at the question from a philosophical perspective, I cannot warm to the idea of promoting and paying for an apparently ineffectual and overpriced product because of the possible economic ramifications of not doing so. It seems to me that to do so would merely postpone an inevitability, if your scenario is to be accepted.

We live in a world whose economies seem completely dependent upon ever-expanding growth, something that surely cannot be sustained indefinitely, given the finitude of resources, environmental capacity, etc. Perhaps a day of reckoning is at hand. Or perhaps world economies need to be looking at alternatives (and what they may be I frankly have no idea!)to the present model.

While I realize I have not really addressed your central question, it is the only response I can honestly give at this point.

Lorne - I don't like it either, believe me. My goal is understanding and judgement only in light of all the available facts.

Buying the F-35 will almost certainly ensure that our pilots do not have an available tool which can match our competitors.

Not buying the F-35 has a good chance of hurting us economically as it seems to be the singular project holding up the US economy at this point.

And it's actually worse than I presented because if the F-35 fails, the economic shock is likely to also result in abandoning the US dollar as the world's reserve currency, something OPEC and the Chinese are already considering. This will cause even more pain.

This is NOT a good situation for anybody. The combination of the military industrial complex as the almost singular model for the US economy, and the almost universal espousal of a cradle-to-grave welfare state and Keynesian economics among virtually all remaining NATO countries has lead this "damned if we do, damned if we don't" situation.

In light of that fact, maybe you're right, maybe the economies of the west DO need to fall, as evidence shows that for too long they've been propped up on credit, while promising lavish entitlements that we now find ourselves without means to accommodate.

I confess, I'm at a loss when it comes to finding solutions to this impasse. I know that we need to shift our system of health care to a more preventive, more holistic, more nutritionally aware, and much less drug-intensive model. Malnourished people drugged up to the eyeballs on anti-psychotics are a serious drain on our economic resources which could be seriously alleviated within just two years or so, if only they'd be amenable to changing their lifestyles and embracing nutritional information which has been available, albeit suppressed for about a century now. We could also save considerable dollars by cleaning house at Health Canada, and handing walking papers to all the corrupt and dishonest doctors and bureaucrats that have infested that cesspool of a federal entity. But that's just two step in the right direction, we need many more than that.

When it comes to Canadian politics, I'm relieved that our leaders are making efforts to spare us the pain, though I'm wishing that someone other than a communist state was available to make these overtures.

That's why I suggest that the political left moderate its criticism of Peter McKay - I believe that both he, and the Prime Minister himself are pushing this because they see the economic implications which they know the Canadian public will patently refuse to accept. I certainly don't like the result, but I probably like this better than a prolonged and deep depression which may yet result from this F-35 fiasco.

The other alternative is that my reading of the situation may well be wrong, and indeed, I hope it is.